The fine art of squeezing your vendor

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A civil servant in Singapore once lamented: "Why is the cost of
supporting a PC so bloody high" Most IT directors have felt the
same way at some point.

At the recent IT Best Practices Seminar organised by the ITMA
(Information Technology Management Association), Leonard Nee,
deputy director of the network and infrastructure projects division
at Singapores government-linked Defence Science" Technology
Agency (DSTA), shared a few tips on how to stave off escalating IT
costs.

Consolidation
One method is to pare down the number of boxes in the server room.
"Patching and backing up servers are still fairly labour
intensive," says Nee.

Although the prices of hardware are dropping, personnel costs
continue to rise as most organisations give employees annual pay
increments. Nee estimates that the cost of supporting one server
can currently exceed US$6,000 annually.

Moving from best-of-breed to a single-vendor enterprise solution
can also help reduce costs. CIOs often pit vendors against one
another on price, in what Nee describes as a "feeding frenzy," and
let the winner walk away with all the contracts. But he warns that
this approach could hasten the death of small vendors and,
ultimately, customer choice.

Extending existing ERP systems is one more tool. He pointed out
that todays ERP technology has evolved from 60s RPS
(materials reorder point systems) and looks set to evolve beyond
the organisation into a means of integrating suppliers and
customers.

Reverse auctions
These are auctions where sellers bid to win the buyers
contract, but Nee adds that they should come with a condition.

Only suppliers who itemise the costs that go into the final
price should be eligible for the tender, he says.

Although the concept sounds good, he warns that it can
jeopardise the stability of the IT industry and hurt goodwill.

Theres a price to pay when vendors get little or no
margins. For instance, they may no longer be willing to help
customers solve problems or prototype certain technologies," says
Nee.

It all adds up
In a survey done last year, Meta Group found that an average of 38
per cent of software licences in an enterprise belonged to
employees who had already left the organisation, says Nee.

That figure excluded idle licences wasted on top-level managers
who dont need the software, says Nee. "Bosses want to have
everything their staff have, whether its of use to them or
not. That adds to IT costs."

Most companies dont know how many licences they own, he
adds. But if they are serious about pulling the plug on redundant
accounts, there are commercial tools from vendors such as
Encentuate that help control access to and track the use of
enterprise applications.

Nee also suggests that companies use replication programs such
as Quest Softwares SharePlex to save on database software
licences.

According to Quest Softwares Web site,
"SharePlex...creates and maintains a fault tolerant replica of your
Oracle database and file systems...to reduce downtime, eliminate
risk for migrations, provide a permanent high availability database
infrastructure and improve the performance of transaction
systems."

Another blind spot can be found in licence agreements. According
to Nee, companies should reject named-user licences and opt for
concurrent- or processor-based agreements. "CIOs should be allowed
to pool client access," he notes.

Many vendors have donated programs to the open-source community
and are continuing to inject research and development dollars into
these applications. Although their motives are unclear, customers
can benefit from such benevolent acts.

"DSTA is using IBMs open-source development platform
Eclipse," says Nee. Other vendor-backed open-source applications
include Sun Microsystems OpenOffice-which DSTA installed on 5,000
new computers in October-BEA Systems development software
BeeHive and open source database software MaxDB, distributed by
MySQL AB.